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PROGRAM-FOR-RESULTS INFORMATION DOCUMENT (PID)CONCEPT STAGEReport No.:PID0034415(The report # is automatically generated by IDU and should not be changed)Program NameCHINA: Health Reform ProgramRegionEast Asia and PacificCountryChinaSectorHealth, Nutrition and Population Global PracticeLending InstrumentPforRProgram IDP154984{If Add. Fin.} Parent Program IDN.A.Borrower(s)People’s Republic of ChinaImplementing AgencyNational Health and Family Planning CommissionDate PID PreparedApril 28, 2016Estimated Date of Appraisal CompletionOctober 17, 2016Estimated Date of Board ApprovalMarch 15, 2017Concept Review DecisionFollowing the review of the concept, the decision was taken to proceed with the preparation of the operation. Other Decision {Optional}Introduction and ContextA. Country ContextChina's social development in the last three decades, which has been remarkable, is being sustained despite an economic slowdown. After three decades of double-digit economic growth, China has successfully lifted over 700 million people out of poverty, an unparalleled achievement in human history. Along with the well-documented economic and social sector achievements, however, inequality across dimensions of income, well-being, and social services have been widened. As the GDP growth rate slowed down to seven percent or even below from 2012, the economy has shifted gear from the previous high speed to a medium-to-high speed growth. The tasks of strengthening human capital and ensuring the people to stay healthy and productive with the satisfaction to the health services has been prioritized in the Government of China’s (GOC’s) political agenda. The 12th Five Year Plan urges inclusive and equitable development as core elements for promoting a "well-off society."While China has made impressive gains on improving overall health outcomes, issues persist in the health sector, while new challenges are emerging. The population of China is aging at an unprecedented rate. Improvements in life expectancy and the consequences of the One Child policy led to a rapid increase in the proportion of the elderly in the population. The population over 65 years old was 138 million in 2014, which is over 10% of total population. According to the World Population Prospects, by 2030, the proportion of senior citizens above 65 will increase by about one fourth, and by 2050, the aged will account for about a quarter of the overall population. At the same time, the increasing burden of non-communicable diseases (NCDs) also imposes great challenges on the Chinese health system. NCDs are already China’s number one health threat, accounting for over 80 percent of the 10.3 million premature deaths annually. More than 50 percent of NCD burden falls on the economically active population (ages 15-64), which may adversely affect the labor supply and compromise the quality of human capital. China’s health delivery system. China, therefore, needs to aspire to, and clearly deserves, a 21st century delivery system that can address the 21st century issues related to chronic diseases, ageing and affordability that it is confronted with. B. Sectoral (or multisectoral) and Institutional Context of the ProgramChina needs to reform the existing acute, hospital-centric, fragmented health delivery model, and build an age-friendly integrated health delivery system that can meet the multifaceted health needs of the elderly population and address the NCD challenges. Since 2009, China has achieved impressive performances in medical reform, in particular in demand side financing, with the majority of the population covered by health insurance. However, the progress on the reform of the supply side service delivery system has been comparatively slower, thus limiting the impact of the reform. 中国目前的医疗卫生服务系统是分散的，以医院为核心， 关注交易数量和利润，提供的服务有些是不恰当的，不必要的和断续的。其结果是，China’s current health delivery system is fragmented, and heavily hospital-centered and volume driven, often providing services that are ad-hoc, inappropriate and unnecessary. Priority is given to treatment rather than prevention. As a result, the cost of healthcare is growing rapidly, and the financial burden on patients remains high, raising affordability concerns for government health spending, as well as for households. Over the last two decades, total spending on health increased fourteen-fold from about 220 billion yuan to 3,170 billion yuan in real terms ADDIN EN.CITE <EndNote><Cite><Author>CNHDRC</Author><Year>2014 </Year><RecNum>67</RecNum><DisplayText>(CNHDRC 2014)</DisplayText><record><rec-number>67</rec-number><foreign-keys><key app="EN" db-id="a55ezws5f5zerae5vt65wd2ef2t2ftxepvfa" timestamp="1441221189">67</key></foreign-keys><ref-type name="Report">27</ref-type><contributors><authors><author>China National Health Development Research Center CNHDRC</author></authors></contributors><titles><title>China National Health Accounts Report</title></titles><dates><year>2014</year></dates><pub-location>Beijing, China</pub-location><urls></urls></record></Cite></EndNote>(CNHDRC, 2014). The quality of service is also not meeting citizens’ expectations, and dissatisfaction with health services is on the rise. If this trend continues, the delivery system will be unable to cater to the demands of a rapidly aging society, burden of NCDs, and the fast pace of urbanization. As China continues to grow, health spending will almost inevitably increase; however, the rate at which health expenditure increases can be controlled significantly through prudent choices on the organization and production of health services, and the efficient use of resources.China has initiated a far-reaching multisectoral health reform program aimed at addressing the systemic issues in its health financing and delivery systems. Recognizing the systemic challenges in the health sector, the GOC has launched a comprehensive healthcare reform program with the aim of providing affordable, equitable and effective health care for all by 2020. Astonishing achievements have been made after the six year implementation, such as the near-universal health insurance coverage. China now has an opportunity to deepen the reforms, and address the underlying problems with its service delivery system. This program will build on the government’s policy initiatives, in designing this program so as to promote inclusive and equitable development, a core element of a “harmonious society”, as described in the GOC’s 12th Five Year Plan.The proposed operation will build on the successful health reform pilots in China. The multi-sectoral health reform also committed itself to a “piloting-scaling up” approach, which was used widely in previous reforms of economy and other sectors. In the Year 2014, the central government selected four provinces (Anhui, Fujian, Jiangsu and Qinghai) to independently design and implement comprehensive healthcare reforms, following the national reform guidelines and strategies. Of the initial four pilot provinces, the comprehensive healthcare reform plans for Anhui and Fujian provinces have been approved by the central government for IBRD support. Both these plans are committed to strengthening primary healthcare, keeping medical (especially inpatient) services within the county/grassroots levels, promoting a tiered healthcare system, public hospital reform, improving the quality and access to care, implementing zero markup for drug sales, reducing risk factors for NCDs, enhancing the use of information technology and mobile devices, as well as strengthening the institutional, financial, regulatory support for the reforms actions. The proposed operation intends to leverage the lessons learned from these pilots - including on the reform implementation pathways, the sequencing of actions, and the institutional and financing milieu – in order to scale-up the successful piloted initiatives at the provincial level, which could provide a template for an eventual nation-wide expansion.The design of the proposed program will be informed by previous project experience. In building on the joint flagship health sector study, and the lessons learned from health reform experiences in China, as well as international best practice, the proposed program is aligned with China’s health reform priorities and recent policy initiatives. This program will also build on the operational lessons of implementing the World Bank's Rural Health Development project (2008-2014), which piloted innovations in 8 provinces and 40 counties—including county hospital provider-payment reform, pay for performance, NCD management at grassroots level, and coordinated care across different level of providers.C. Relationship to CAS/CPSThe proposed operation is fully aligned with one of the three main areas of engagement of the Country Partnership Strategy (2013-2016) for China, because it will increase “access to quality health services and social protection”, and enhance “opportunities in rural areas and small towns”. The design of this operation reflects the World Bank Group’s most valuable contribution in China, by “bringing and applying ideas, innovation and knowledge” to the provincial and then the national healthcare reforms. As summarized in the current CPS, one of the key lessons is that “focusing on innovation and pilots at provincial and sub provincial levels is a good way to leverage World Bank financing given China’s development model.” The CPS has emphasized the need to restructure the Chinese health system and increase efficiency of public spending, which will be addressed in this operation. The proposed operation specifically addresses Bullet Point 60 of the CPS, namely “piloting and evaluating health care innovations that will further the government’s ongoing health system reform agenda”. Finally, Outcome 2.1 of the CPS “increasing access to quality health services”, “helping China face the challenges of an aging population” and “reorient China’s health delivery system away from reliance on hospital care and building a revitalized primary health care system well-coordinated with higher levels of care” are all represented in the proposed program.D. Rationale for Bank Engagement and Choice of Financing InstrumentThe World Bank has been working closely with the government in analyzing the health sector and providing suggestions on the way forward. This operation aims to operationalize the recommendations arising from this work, which have been endorsed by the government. The proposed program will support the Government’s health reform programs by financing a purposely-selective subset of sub-sectoral areas. The guiding principles for choosing these areas are that they: (i) address major challenges facing the health sector (ii) are part of or linked to a comprehensive package of reforms aimed at specific results; (iii) build upon the World Bank’s past engagement and ongoing sector analytic work; and (iv) provide “value added” in terms of interventions that are innovative, scalable or expand upon previously piloted initiatives. The choice of sub-programs and activities within sub-programs is driven by two factors, i.e. the need to: (i) support the most important interventions in the Government program that can help achieve the program results, and (ii) limit the proposed Bank supported program to a reasonable scope within the overall Government program.The proposed operation intends to support the central and provincial health reform programs through the Program-for-Results (PforR) financing instrument. At the World Bank annual innovation workshop in Year 2014, GOC agencies (including the National Development and Reform Commission, the Ministry of Finance, the National Health and Family Planning Commission and others) all expressed a strong interest in and support for experimenting with the PforR instrument in the new health operation. The World Bank team has also provided comprehensive training at various levels on the PforR instrument, and associated procurement, financial management, and social and environmental safeguards issues, which have laid the foundation for the program definition, preparation and implementation.The PforR instrument is appropriate for the proposed operation because it promotes a focus on results, while addressing the existing social, financial and institutional barriers to effective health service delivery, and promoting the GOC’s health care reform.Program Development Objective(s)Program Development Objectives The proposed Program Development Objective (PDO) is to deepen and scale up the ongoing health reform interventions to improve the quality and the efficiency of the healthcare delivery systems in Anhui and Fujian provinces. This will be undertaken through a combination of comprehensive public hospital modernization and the implementation of a “People Centered Integrated Care” (PCIC) based service delivery system with strengthened primary care.Key Program ResultsKey program results indicators are indicated below. The first two key result indicators reflect the expected outcomes of public hospital modernization (Result area 1), which is anticipated to increase hospital efficiency, as well as the quality of hospital services. The next two indicators reflect the expected outcomes of implementing the PCIC model (Result area 2), which is anticipated to increase service utilization at county and lower levels and reduce hospitalization rates for those NCDs that are amenable to effective prevention and disease management through integrated care. The fifth indicator reflects the expected impact of Result areas 3, which will, inter alia, introduce best practice hospital and provider payment instruments.Reduction in drug costs as a proportion of hospital costs, consistent with international norms (e.g. less than 25% - exact proportion TBD);Increased percentage of inpatients to be treated through the use of standardized clinical pathways; Increased service utilization by patients at county level and below. The national goal of this indicator, which is also the goal of the PforR program, is at least 90% of required inpatient and outpatient service utilized by patients within the catchment area at county level and below;Reduction in annual hospital admissions for acute complications of hypertension and Type 2 diabetes; andIncreased proportion of hospital output financed through prospective comprehensive payment systems (e.g. global budgets, DRGs, etc.).The proposed Bank lending operation is expected to have the following key results areas that will support Chinese government’s vision for health service delivery system reform.Result Area 1: Drawing on the reform model in Sanming prefecture and other such efforts to scale up comprehensive public hospital reforms with the aim of improving the quality and efficiency of hospitals services.提升医院的服务质量和服务效率。这一部分将借鉴推广福建三明公立医院改革以及其他地方改革的成功经验，具体改革内容包括：Result Area 2: Establishing effective and accountable PCIC based service delivery system with strengthened primary healthcare services;Result Area 3: Addressing cross-cutting dimensions of the policy, institutional and financial environment in order to support the hospital and PCIC reform interventions; andResult Area 4: Strengthening program stewardship, and building institutional capacity at the central and provincial level.A set of disbursement-linked indicators (DLIs) for the program will form the basis of disbursement (see illustrative examples below); the 3 main criteria for defining these DLIs are that: a) the desired results are within the control of the government (at the national, provincial and county levels); b) the DLIs are achievable in the program period; and c) the DLIs are verifiable. The use of such DLIs is expected to sharpen the focus of stakeholders on the critical results under the program. Program DescriptionAs emphasized above, the proposed Bank lending operation will support the national and provincial governments’ ongoing health system reform, which was launched in year 2009, with the aim of providing affordable, equitable and effective health care for all by 2020. After six years of implementation with impressive achievements, China has now moved into a ‘deep water’ reform phase, with the aim of promoting a “Healthy China”; the government has accordingly defined the strategic directions for reform, including the following priority areas:Modernizing public hospitals, which includes interventions to fully implement the “zero-markup” policy for drug prescription; adjustment of pricing schemes of medical services; reform of the Human Resources for Health (HRH) management policy; introduction of performance based compensation system; establishment of modern hospital management mechanism; and strengthening of performance monitoring and evaluation;Establishing integrated service delivery system and enhancing tiered service delivery through a strengthening of the service provision capacity of the primary health care (PHC) and the rural health care systems; enforcing the gate keeping function of PHC; implementing a General Practitioner (GP) based service model; deepening comprehensive reform of PHC facilities; and stepping up the implementation of an essential public health package;Strengthening the Universal Health Insurance program through provider payment reform, establishment of catastrophic disease insurance, elevation of risk pooling to prefecture and provincial levels and increase of insurance portability;Promoting private engagement in health service delivery; and Reforming the pharmaceutical supply system.It should be noted here that the government is in the process of formulating its 13th Five Year Health Development Plan, which will further elaborate and finalize the reform roadmap covering the years 2016 to 2020. The Plan is expected to be finalized and launched by June 2016. The Bank team will keep in close contact with the national and provincial governments during program preparation in order to ensure the alignment of the proposed program design with the government’s 13th five-year health development plan. The proposed health PforR operation will focus on supporting the government’s overall health reform agenda by focusing on two of the priority areas – namely, modernizing the functioning of public hospitals and establishing a well-functioning integrated service delivery system that also ensures the effective delivery of primary care services - in two national pilot provinces, Anhui and Fujian. This process will require a transformation in the organization and provision of healthcare services, as well as in the supporting policy, institutional and financial environment.Specifically, the proposed program (which is directly within the span of control of the government at central, provincial and county levels in China) will have the following four sub-programs.Sub-program 1: Drawing on reform model in Sanming prefecture and elsewhere to scale up the comprehensive public hospital reforms, with the aim of improving the quality and efficiency of hospital services. Sub-program 2: Establishing an effective and accountable PCIC based service delivery system, with strengthened primary healthcare services; which includes the following three major sets of activities: (i) establish gate-keeping and dual-referral system; (ii) strengthen disease prevention and health management; (iii) Improve service delivery. Sub-program 3: Addressing the following four, cross-cutting dimensions of the policy, institutional and financial environment in order to support the health service delivery reform: (i) strengthen the purchasing and contracting capacity of health insurances; (ii) apply new regional and capital investment planning approaches in support of population health; (iii) reform HRH management policies; (iv) strengthen the Health Monitoring & Evaluation (M&E) system. Sub-program 4: Strengthening program stewardship, and building institutional capacity at the central and provincial level. This sub-program will support policy development, technical assistance, capacity building, verification of result indicators and monitoring and evaluation of program implementation. Since technical assistance will be critical in implementing the proposed program, consideration will also be given to supplementing the program resources with one or more Trust Funds to support the program implementation, should appropriate donors be identified.A hybrid design, with Sub-program 4 following a traditional investment project financing model, has been proposed by the government in order to ensure sufficient funding to support technical assistance, capacity building, monitoring and evaluation (M&E) and, most importantly, the verification of result indicators.Institutional Arrangements for ImplementationA multi-agency high level Steering Committee at the central level will be established. The Steering Committee could comprise of the decision makers from all relevant central ministries, and governors from the program provinces. Under the Steering Committee, the State Council Health Reform Office shall be empowered to provide overall direction and leadership of the PforR operation and be engaged in key policy discussions and decisions which may have an impact to the health reforms in program provinces. SCHRO will also participate in field visits and workshops for experience sharing and dissemination. The Project Management and Supervision Center of NHFPC will serve as the secretariat to the SCHRO and provide program management and implementation guidance/support to the provinces. The institutional arrangement at the provincial and prefecture levels in Fujian and Anhui will mirror the structure at the central level. To foster collaborative learning and improve the health systems in the two provinces within the proposed program, consideration will be given to adapting the multi-organizational, Transformation Learning Collaborative learning approach that has been used successfully in the health sector in many countries. This approach to collaborative learning has been demonstrated to improve health outcomes and the quality of healthcare services with lower costs and greater convenience than is possible by traditional means of communication (viz. conferences and seminars, telephone conference calls, among other things). Initial Environmental and Social ScreeningThe program Environmental and Social Assessment (ESSA) will be conducted to identify the adequacy of the client’s environmental and social systems during the program preparation. Measures to address gaps and demand for improvements will be documented in the ESSA, and defined in the Program Action Plan.Tentative financingSource: IBRDBorrower/Recipient People’s Republic of ChinaAmount:Total $600 millionContact pointWorld Bank Contact: Ramesh Govindaraj and Shuo ZhangTitle: Lead Health Specialist; Senior Health SpecialistTel:(202) 473-3577; 5788+7786Email:rgovindaraj@; szhang2@Borrower/Client/RecipientContact:Ms. Xue HainingTitle:Director, National Health and Family Planning CommissionTel:010-62030870Email:tgsggzdc@Implementing AgenciesContact:Mr. Xie Ruijin and Mr. Zeng WuqiTitle:Director, Anhui and Fuhian Provincial Commission of Health and Family Planning, respectively.Tel:0551-2998060 and 0591-87801778Email:ahwstygb@ and zeng55203@For more information contact:The InfoShopThe World Bank1818 H Street, NWWashington, D.C. 20433Telephone: (202) 458-4500Fax: (202) 522-1500Web: ................
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